Facebook Pays $2 Billion for Virtual Reality Company

2:57 PM PST 03/25/2014 by THR Staff
Mark Zuckerberg

UPDATED: "Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate," said Facebook CEO Mark Zuckerberg.

Facebook on Tuesday said it has reached an agreement to acquire virtual reality company Oculus VR Inc. for about $2 billion.

"Mobile is the platform of today, and now we're also getting ready for the platforms of tomorrow," said Facebook founder and CEO Mark Zuckerberg. "Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate."

The transaction, which includes $400 milion in cash and 23.1 million shares of Facebook common stock, is expected to close in the second quarter of 2014. The purchase price could grow by $300 million in cash and stock based on performance achievements.

Oculus will remain headquartered in Irvine, Calif., and continue to develop its Oculus Rift virtual reality platform.

The company raised $2.4 million for the headset from more than 9,500 Kickstarter backers in 2012. It has also raised just over $90 million in venture funding. A developer kit of the Oculus Rift headset became available to purchase for $300 in 2012. A consumer version is expected to be released in late 2014 or early 2015. 

HBO's Game of Thrones has been showcasing Oculus Rift technology at its traveling exhibition through an experience called Ascend the Wall. The realistic imagery places participants at the series' Castle Black and takes them in an elevator to the top of the Wall. 

"We are excited to work with Mark and the Facebook team to deliver the very best virtual reality platform in the world," said Oculus co-founder and CEO Brendan Iribe. "We believe virtual reality will be heavily defined by social experiences that connect people in magical, new ways. It is a transformative and disruptive technology that enables the world to experience the impossible, and it's only just the beginning."

Facebook has been making several big mobile acquisition bets in recent years. The Palo Alto, Calif., company acquired messaging service WhatsApp in February for $19 billion and purchased Instagram for $1 billion in 2012. 

Zuckerberg, in a conference call with investors, said that the company feels strong enough in its mobile position to begin focusing on the next big computing platform. 

"Today's acquisition is a long-term bet on the future of computing," he said. "I believe Oculus can be one of the platforms of this future." 

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